TOKYO Dec 20 Issuance of Japanese government
bonds to the market will be cut in fiscal 2008/09 for a third
straight year, the Ministry of Finance said, as total JGB
issuance will likely fall to its lowest level in eight years.
The ministry plans to issue 105.1 trillion yen ($927.8
billion) of JGBs directly to the market, according to its draft
budget for the year starting next April 1 submitted to the
cabinet on Thursday.
The planned 105.1 trillion yen issuance to the market, down
from 109.6 trillion yen for the current fiscal year, is the
smallest since 104.8 trillion yen issuance planned initially in
fiscal 2002/03, the MOF said.
Total JGB issuance -- which includes bond purchases by the
Bank of Japan and government agencies -- is expected to fall to
126.29 trillion yen from a revised 143.6 trillion yen in fiscal
2007/08, the second largest drop, the official said.
Total issuance will likely be below 130 trillion yen for the
first time since 2000/01, helped by declines in "zaito bonds" or
semi-government bonds refinancing the MOF's fiscal investment
loan programme fund, and issuance of refinancing bonds.
Japan remains heavily reliant on the public sector to finance
its huge borrowings, with outstanding public debt expected to
stand at around 773 trillion yen at the end of this fiscal year,
nearly 150 percent of the nation's gross domestic product, the
highest among major industrial nations.
The MOF will roll over 92.5 trillion yen of bonds.
It plans to reduce offers of its unpopular 15-year floating
rate JGBs, as well as cut five-year bond issues, while boosting
The ministry plans to issue the 15-year floating-rate JGBs in
four offers of 600 billion yen each during next fiscal year. It
issued 1.0 trillion yen of the bonds at each of two auctions in
the April-September first half of this year, but cut the offers
to 700 billion yen each for two auctions in the second half.
The MOF plans to offer 400 billion yen in 40-year JGBs next
fiscal year, after a debut 100 billion yen this year.
It plans to cut the monthly offer amount of five-year JGBs to
1.9 trillion yen next fiscal year from 2.0 trillion yen this
The MOF plans to use 9.8 trillion yen from special-account
reserves to redeem government bonds to help trim state debt. Of
the total, about 3 trillion yen will be used to buy back bonds
from the market, including 1.2 trillion yen of 15-year floating
The MOF will also reduce six-month treasury bills to 3.3
trillion yen next fiscal year from 6 trillion yen this year, as
part of its plan to combine six-month treasury and financing
The MOF will have last-minute negotiations with other
ministries over the next few days before compiling a final draft.
That draft, expected to have only small changes from the
proposals unveiled on Thursday, is expected to be approved by the
cabinet on Dec. 24 and will be submitted to parliament next year.
(Reporting by Chikako Mogi, Editing by Michael Watson)